December 1997
How to avoid being burnt when negotiating to
purchase bare land or a section.
Hello
Building your own home, i.e. the owner builder
- the pit falls
Last month I talked about the five(5) biggest mistakes that most
people make either before, during or after the construction of
their own new home. Well there is a sixth that happens quite often.
I know that during a new home project we all want our hard earnt
dollars to stretch as far as possible, and hey, who can blame
us. But the saying, a little knowledge can be dangerous or expensive
is true. The sixth mistake is when the owner (without experience
or an understanding of procedure) buys product, material or does
the job themselves without communication and proper advice from
a builder. The result is that most often it ends up costing the
owner more than if he/she had let the main contractor do it. Let
me give you a few examples.
We priced a job where the mains power cable for the proposed
new house was going to be expensive. The owner thought he could
make substantial savings by laying it himself because through
contacts he could get a 40% discount off the cost of the cable.
Well apart from the technicalities of whether the cable was suitable
for the required loading (which it was), once the job was completed
they realised it had been laid in the wrong location and part
of it had to be re-laid. That wasn't the worst of it. My electrician
told me that he buys his cable at such a good rate that his price
to me was discounted 50% and by the time I added my margin for
the main contractor, there is no price saving. However, there
is a bill to retrench the cable and, of course, no guarantee protection
like the Five(5) Year New Home Master Build Guarantee that I gave
him as a Registered Master Builder.
Other examples include when the owners says, "I want to
buy the toilets, taps, shower tray and bath or wallpaper for the
contractor". What we find here is that quite often products
appear to be cheaper through merchant although they often do not
supply a complete package. What I mean by that is, take a shower
tray. A plumber would include the waste fitting that connects
directly to the base of the base of the shower tray as one item
and credit accordingly, where as the merchant will only provide
the shower tray so the plumber will turn around and charge the
owner an extra to supply the waste fitting. Once again the owner
ends up back at square one and still had to do all the running
around.
I mentioned in our Christmas card and newsletter that my wife
and I are building a new home at present. With almost all our
subcontractors, I am getting the to supply everything, even though
this is my industry. They are responsible for getting all of the
products together as a complete package. I am always going to
be more productive at my usual employment and not waste my time
running around. I think that apart from the fact that it is possible
some of the time to make a saving by buying direct and supplying
to the contractor, the benefits can also be lost if the product
fails. The contractor is not going to cover the cost of any labour
involved in the reinstallation of the product. The Master Build
people would not cover it with their guarantee either, and the
merchants can be slow to perform or replace because the owner
is quite often only a one off purchaser. Who need the hassle?
I know it may cross your mind that I am also a building contractor
and looking from a contractor point of view, not wanting to miss
out the margin on some of the goods and services supply, and that's
true to a point. But when doing things yourself, my advice is,
research your subject, do your homework, ask for advice if you're
unsure, make haste slowly and remember, proper planning prevents
a poor performance. Do these things, and you will save money.
By the way, for those of you just starting to receive our newsletter
and wonder what the five other mistakes most people make, just
phone the office and Jackie will be only too pleased to send you
a copy.
Taking the risk out or purchasing bare land
A few weeks ago a couple from Wellington rang me to say that
they wanted to build in Waikanae. But in order to get the finance
from the lender, they needed to put a land and house package together.
So they asked me if I could come over and have a look at the piece
of land. Of course it was my pleasure, and the real estate agent
was also going to meet us up at the block, as it was rural.
My advice to the proposed owner was at the risk of them not buying
the bare land and building with us,. "do not buy this block
of land". The land agent was trying to sell the two(2) ha
directly under the main high tension electricity cable pylon line
that supplies power up and down the country. My prospect client
was about 26 years old, just married a short while. If they built
and lived there they could look forward to a lifetime of unexplained
sickness, miscarriages or sibling deformities.
Now I'm sorry if you are a real estate agent and these comments
offend you, but the large majority of agents that I have come
in contact with seem to be uninterested in their clients' and
prospects' welfare, and at times behave very unprofessionally
and unethically. I don't think I'm alone in my thoughts.
Look, if you're thinking of buying a bare block of land or section
to build on and you want un-bias opinion from a design and build
perspective, please call me. It would be my pleasure to give you
the value of my experience on the pros and cons of your proposed
land purchase as I see it, and totally obligation free. One of
the great advantage is it will give you an idea of the types of
expenditure you may encounter like sewer, water, power, access
and excavation. This information could be very valuable tool when
it comes to negotiating the price or terms and conditions of purchase
of your land. I don't care where in the country you are, my time
is free. The only thing I ask is that I'm reimbursed for the cost
of my travel expenditure. Remember this could save you thousands
of dollars plus heartache.
Of course, obviously I'm going to work hard to prove that I'm
the best person you could employ to build that home you've always
wanted. And by the way, the offer of the free site inspection
also applies if you already have a property to build on and want
some help and advice on siting.
Now remember, the comments that I make in regard to your proposed
building site or property are only my opinion as I see it and
there may be other hidden obstacles that may need to be brought
to your attention or be aware of, including legal issues. As an
example, I think you'd agree it would be important to know if
there were any treaty claims against a property you wish to purchase,
your lawyer should check that out. Another thing you should do
before purchasing is, as part of the conditions of purchase apply
to the council that collects the rates for the proposed property
for whats known as a "Land Information Memoranda" or
L.I.M. The L.I.M. will give all the information and history know
about that particular property by the council. Actually this information
should really be obtained, once again, before negotiating the
purchase price and other conditions.
All of the above information will add up to be a very powerful
tool to help insure that your land purchase is and will remain
a sound investment. As an example I have obtained and enclosed
a photocopy of the Masterton District Council L.I.M. application
form. All councils have a similar form at their council office.
Until next time, remember again, proper planning prevent a poor
performance.
Regards
Julian Moss
Oh PS: More and more inquires and sales are from beyond the toll
free area of our office. Because of this, for your convenience I
have installed an 0800 Free-Help phone line to our office. So if
you have any questions or queries you can contact me on:
0800 MOSS BROS (6677-2767)
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